The following information is from financial statements in mi

The following information is from financial statements (in millions of dollars): Total assets 100$ Net financial assets 60 financial obligations 10$ common equity 50$ Net inome 20$ Sales 150$ Calculate: Return on common equity (ROCE) net operating liability (NOL) financial assets operating assets operating liability Asset turnover profit margin

Solution

1)-RETURN ON COMMON EQUITY= NET INCOME/COMMON EQUITY

=20/50*100

40%

2)-NET OPERATING LIABILITY=SAME AS OPERATING LIABILITY I.E 40 AS SHOWN IN POINT 5.

3)-FINANCIAL ASSETS=60+10=70

4)-OPERATING ASSETS=TOTAL ASSETS - FINANCIAL ASSETS=100-70=30

5)-OPERATING LIABILITY=TOTAL ASSETS-COMMON EQUITY-FINANCIAL OBLIGATION=100-50-10=40

6)-ASSET TURNOVER=SALES/TOTAL ASSETS=150/100*100=150%

7)-PROFIT MARGIN=NET INCOME/SALES*100=20/150*100=13%